By Johanna Bennett

The PIMCO Income Strategy Fund I (PFL) and the PIMCO Income Strategy Fund II (PFN) usually sell at slight premiums. But thanks to the recent market falloff, the two closed-end funds are now selling at discounts of 2.58% and 1.95% respectively, according to CEFConnect.com

Not that long ago, avid closed-end fund investors, along with Barron’s were bemoaning overvalued and frothy markets, particularly regarding fixed income. But a lot of premium evaporated last month amid the taper terror fueled by fears that Ben Bernanke and the Federal Reserve would dial back their bond-buying efforts sooner than previously anticipated.

How much? In June, the average closed-end fund lost 7% on a net asset value basis and 9% on a share price basis, according to Morningstar.

Here’s part of what Morningstar’s Esser has to say:

While we like these funds, they are not without risk. PIMCO’s extensive use of leverage and derivatives in the past indicates a willingness to put capital at risk for potentially improved total return. These funds are not for the faint of heart. However, the recent selloff has created a unique buying opportunity for investors. While some of PIMCO’s hottest funds continue to sell at double-digit premiums (PIMCO High Income (PHK) for example, is selling at a 40% premium), PFN and PFL are selling at rock-bottom prices. Investors looking to gain access to Gross and his team of bond experts should consider adding the funds to their portfolios.

About Focus on Funds

As exchange-traded funds and other investing vehicles have ballooned in number, the task of figuring out what works well and what doesn’t has only gotten harder. Barrons.com’s Focus on Funds looks under the hood of ETFs, mutual funds and hedge funds for overlooked values, actionable ideas and the latest pitfalls for fund investors.

Chris Dieterich has covered the U.S. stock market for The Wall Street Journal and Dow Jones Newswires. He is a graduate of Regis University and the Missouri School of Journalism.